This document provides an overview of the diamond industry. It discusses the history of diamonds, where they are found naturally, their extreme hardness on the Mohs scale, and different types of diamonds found in India. It also covers the process of diamond cutting and facets that are polished onto rough stones to enhance their brilliance. In summary, the document presents background information on diamonds, including their origins, properties, sources, and basic processing through cutting and faceting.

1. [1]
A
COMPREHENSIVE PROJECT REPORT
ON
“Working Capital Management at Laxmi Diamond Pvt. Ltd”
Submitted to :
Shrimad Rajchandra Institute of Management and Computer Application
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
In
Gujarat Technological University
UNDER THE GUIDANCE OF
Mr. Manish Pathak Company Guide (If Any)
Name and Designation
Submitted by
Brinda J. Rajpara
Yash R. Shah
Batch : 2010-12,
Enrollment No:
Brinda J. Rajpara :107740592019
Yash R. Shah :107740592089
MBA SEMESTER III/IV
Shrimad Rajchandra Institute of Management and Computer Application
MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad December, 2011

2. [2]
Company Certificate
“This is certified that Mr./ Ms Simpal M. Vora and Mr/Ms Jalpa S. Vyas.
from
Shrimad Rajchandra Institute of Management and Computer
Application, have carried out the research on the subject titled
“Employees’ Turnover Rate” at this company/organisation under the
supervision of ………… ……………..from ……. To……........ I also certify
that, the above mentioned students have carried the research work
satisfactory.

3. [3]
Institute’s Certificate
“Certified that this Comprehensive Project Report Titled “Employees’
Turnover Rate” is the bona fide work of Mr./ Ms Simpal M. Vora and Jalpa
S. Vyas,
(Enrollment No107740592050 & 107740592102), who carried out the
research under my supervision. I also certify further, that to the best of my
knowledge the work reported herein does not form part of any other project
report or dissertation on the basis of which a degree or award was
conferred on an earlier occasion on this or any other candidate.
Signature of the Faculty Guide
(Name and Designation of Guide)
(Certificate is to be countersigned by the Director/HoD)

4. [4]
PREFACE
For a management student training plays an important role during his/her
study. Training provides a corporate or real world platform to learn practically.
MBA degree without any training or corporate world experience is just like ship
without radar. Industrial training provides a great training experience about
management concepts and its applications.
This training provides me an opportunity to know the current situation of
the corporate world. It provides me a platform whereby I can apply my theoretical
knowledge and solve many practical problems. It can help me to be a successful
manager in future.
The credit goes to all those who help me directly or indirectly to complete
this project within a short span of time. For preparation of this report I would like
to thank the faculty members of college as well as the entire staff of Laxmi
Diamond Pvt. Ltd, Surat.

5. [5]
ACKNOWLEDGEMENT
A project of this nature involves the support of many people. I believe that would
be lacking in my duty if I do not express my sincere gratitude to them.
I feel immense pleasure to thank Dr. Prashant Joshi, Director, Shrimad
Rajchandra Institute of Management & Computer application (SRIMCA), Tarsadi for
making available all facilities in fulfilling the requirements for the research work.
I wish to convey my special thanks to _________________ (Senior HR
manager), and to __________________ at Laxmi Diamond Prv. Ltd. for giving me all
possible help and guidance throughout training period.
I feel immense pleasure in expressing my deep sense of respect and
indebtedness to my institute project guide, Ms. Tarjani Desai, Faculty, SRIMCA for his
valuable guidance throughout preparation of this report.
I would also like to extend my heartily felt gratitude to all the respondents who
spared their valuable time and helped me filling up the questionnaire by providing the
needed information. In the course of my interaction with them, my understanding of the
very notions on which I am conducting the study, deepened greatly.
I am indebted to my family and friends for their kindly co- operation. Last but not
the least, I would like to thank all those whom I have missed but have helped me day in
and day out directly or indirectly.

6. [6]
DECLARATION
We, Yash R. Shah and Jalpa S. Vyas, hereby declare that the report for
Comprehensive Project entitled “Employees’ Turnover Rate” is a result
of our own work and our indebtedness to other work publications,
references, if any, have been duly acknowledged.
Place : …….. (Signature)
Date : (Name of Student)

7. [7]
Executive Summery

8. [8]
TABLE OF CONTENTS
SR. NO. Topic PAGE NO.
01 About the Company
02 About the Topic & Literature Review
03 RESEARCH METHODOLOGY
3.1 Objectives
3.2 limitations
3.3 Benefits
04 Data Analysis & Interpretation
05 FINDINGS
06 RECOMMENDATIONS
07 BIBLIOGRAPHY

9. [9]
INDUSTRY PROFILE:-
INTRODUCTION`:-
As long as about three thousand year ago, man bent down to pick up a glistering pebble
and by some chance found it to be different from other stones form that times, diamond
began to acquire magical power and avarice. More recently it has become an object of
extreme scientific Curiosity.
Man began to collect diamond treasure them, built legends around them trade in them
as, use them as tools, them as gems, raise loan with them fight over them, and
eventually to give them as symbol of love and trust his early instinct to treat diamond as
unique was true, because today probably more effect goes into and research on any
other material.
The desire for diamond because of its beauty of hits scientific industrial uses has not
diamond over the years but has become much more widespread. A century ago, the
possession of a diamond was the prerogative of the rich alone since the discovery of
huge deposit in Africa, and more recently Diamond pipes in Russia, mining and
marketing of diamond has brought them within reach of large section of the population
of industrial countries, bot as gems and as parts of working tools.
Diamond is the hardest substance man has ever discovered and the purest that occurs
in nature, although very highly prize as gems, however, it is composed of one of the
commonest substance on earth, ordinary carbon, carbon is found in all living thing,
plants as well as animal and in many rocks.
Diamond can be broken with the blow of hammer yet will penetrate steel by pressure. It
is extremely durable, being able to withstand and attacks the strongest acids and
alkalis, yet is an unstable forms of carbon and will burn or oxidizes on the surface it
dropped in a fire for short times. It has a very high melding-point and will cut steel for
long period at near red heat, yet hearted to bright red it will catch fire and convert to
carbon dioxide gas.

10. [10]
(1.2)MEANING OF DIAMOND:-
Adomas and adamant were words implying extreme hardness, derived from the GREEK
ADAMNO meaning “I tame” or “I subdue”. They were used in classical time to describe
supplier, which was sometimes confused with diamond. In the bible, god tells the
prophet Ezekiel, ‘As an ADMANT HARDER than flint have I made the forehead.’
DEFINITION ON DIAMOND:-
“Diamond is a crystallize, mineral, essentially composed of carbon. The word diamonds
originally come from the Greek words ‘Adams’ which means ‘unconquerable’.”
HARDNESS OF DIAMOND:-
Hardness can be defines as the ability of mineral to resist abrasion when scraped by
any other mineral.
HARDNESS SCALE:-

11. [11]
1. Talc
2. Gypsum
3. Calcite
4. Fluorite
5. Apatite
6. Orthoclase Feildspar
7. Quartz
8. Topaz
9. Corundum
10.Diamond
WHERE DIAMOND IS FOUND:-
Pliny remarked that diamond acumen pained gold. Diamond are found with gold, but we
know now that they arrive together through the action of winds and rain over millions of
year gradually shaking and sifting them and other heavy mineral together diamond does
not occur in its originally source with gold pliny referred to six type of diamond, but form
his description some of the types were sapphires which are very heavy and are also
found with gold.
As far as is known, all early source of diamond were in the beds of active or dried up
rivers, despite the legends. India was the only known source for over 2000 year expect
for Borneo where diamond were probably first mind in the sixteenth century. The
Brazilian Diamond fields were discovered in the gold mining area of minas gerais in
1725. New discovered always seem to have been regarded with skepticism stones was

12. [12]
questions on the London market and as late as 1740 a jeweler declared in print that it
was a false idea that the mines of brazil furnish diamond. Even a century later
Portuguese possession in India, to sell them mining was carried out so intensive that
main area were almost exhausted in twenty years.
By an extraordinary coincidence the South African diamond fields were discovered in
1860, by the times that the Brazilian fields were exhausted when the news arrived in
Brazil, history repeated itself. The Brazilian Merchant refused to believe the facts and
many were exhausted. When the news arrived in Brazil history reputed itself. The
Brazilian merchant refused to believe the facts and many were ruined. PROFESSOR J.
GREGERY, London university mineralogists, actually spent three weeks in the South
African diamond fields and subsequence wrote an article for the geological magazine in
1868 declaring the story of South African diamond was false and simply a scheme for
trying to prompt the employment and expenditure of capital in searching for the precious
Stone in that country major diamond deposits were found in the arctic area of Yakuida
in Russia form 1954. Again there was disbelief in some quarter before the diamond
came on to the market in the west, but now the Russia mines have an output
comparable with that of South Africa.
Following famous diamond are found in India mines.
1. Kohinoor
2. Hope
3. Pit
4. Grate mugale
5. Deriya noor etc.
DIAMOND CUTTING:-
Early description of faceting diamond refer to polishing and it is presumed that
octahedral crystals were left their natural shape or the angled of the face were altered
by cutting, since they were altered by cutting since they were called points-cut stones.
An octahedral face is in fact impossible to polish. Moreover, the process of cleaving
produces points stones without the necessity for polishing Grinding to remove the top

13. [13]
point of the Octahedrar crystal to produce what was called the table stones presumably
come later. The history of cutting and polishing is purely documented and the art
remained a trade secret for many centuries. It is uncertain where cutting Originated,
whether in Europe or India, as well as which Europe was probably in the fourteenth
century and in India possibly about the some times because there was on earlier bon for
superstitious reason on shaping diamond superstious. Probably delayed the
development in the alternation of a diamond was supposed to destroy its magical
properties.
Tavernier noted in the seventeenth century that there were considerable differences in
the techniques of European and Indian cutters. He also surmised that the Indian used
facets to hide fiaws.
WHICH PEOPLE INVOLVE IN DIAMOND INDUSTRY?
There are many people involve in diamond industries. In world 60% people having
diamond factory, In India 40% people having diamond factory. There are many Surat
people doing this business in Gujarat. There are 50% people doing diamond business in
Surat.

14. [14]
COMPANY PROFILE:-
LAXMI DIAMOND is the vision of one man VASANT GAJERA, who started his career in
the nascent diamond industry in 1970 at the bottom of the ladder, but with sheer grit and
determination, shaped the group into an org. par excellence within three short decades.
Today with turnover in the excess of 2000 Cores. LAXMI DIAMOND is a sight holder
of the diamond trading company, the sales and marketing division of De beers, the
largest producer of diamond in the world? Poised on the threshold of becoming a global
leader, LAXMI DIAMOND has 9 offices and 11 manufacturing unit in various part of the
globe VASANTBHAI modestly attributes this resounding success to the strongest of his
people the dedicated workforce, business associated and above all, the support of his
family without which success of his family without which the success of LAXMI
DIAMOND would have been just another dream.
Rough-polished-jewellery is but a logical extension and VASANTBHAI started a
jewellery-manufacturing unit at SEEPZ MUMBAI in 1996 with turnover Of 5 cores in first
year with 6 jewellery manufacturing unit worldwide. The sales of jewellery will expect
100 cores in 2004. From unbranded is a step and in 2002, the CYNGUS brand of
jewellery was born CYNGUS is constellation of start in the shape of a swan an elegant
bird, like CYNGUS jewllery, elegant and exquisites.
BUSINESS DESTINATIONS:-
1. U.S.A.
2. JAPAN
3. SINGAPORE
4. TAIWAN
5. BELGIUM
6. HONGKONG
7. THAILAND
8. SWITZERLAND
9. DUBAI

15. [15]
10.MALAYS
STEPPING-STONES FOR ‘LAXMI DIAMOND’:-
No Award YEAR
1. Award for export of Polished
Diamonds by GJEPC in the
Non-DTC Category.
1992
2. Laxmi Diamond becomes
100 % EOU
-
3. DTC sight holder 1995
4. Award for largest exporter
of Diamonds by GJEPC in
the DTC category.
1999 & 2000
5. Award for second largest
exporter of Polished
diamonds from India.
1999 & 2000
6. Award from the FIIE for
highest growth in exports
given by the President of
India.
2000
7. Award for second largest
exporter of Polished
diamonds from India.
2001

16. [16]
8. SGIA. 2004

17. [17]
About the products:-
We are specialist in the following shapes of the Diamond
1. Round
2. Princess
3. Taper
4. Marquise
5. Pan
6. Chalky
7. Oval etc.
IDENTIFICATION OF PROCESSES:-
Following 12 processes identify entire activities of this organization.
1. Purchase
2. Rough Diamond Checking
3. Cleaving
4. Laser
5. Polishing
6. Polished Assortment/QC/Dispatch
7. Sales and Marketing
8. Maintenance
9. HRD
10.EDP
11.Excise
12.A/C.

18. [18]
PROVISION OF RESOURCE AND WORK
ENVIRONMENT:-
The LAXMI DIAMOND has determined, provided and is maintaining the infrastructure
needed to achieve conformity to requirements. Infrastructure includes Buildings,
workspace and associated utilities supporting services as transport and communication
Production process equipment. The LAXMI DIAMOND has adequate office spaces,
workshop space, open space, storage tank, canteen etc.
The LAXMI DIAMOND has following manpower to meet the requirements as stated:
1. Chairman 01
2. Managing director 02
3. CEO 01
4. General Manager 01
5. Office Staff
Department Head(90)
Assist. Manager(10)
100
6. . Factory Staff 700
The LAXMI DIAMOND is having Production/ process equipment adequate for the
requirements.
Services as and when required,
1. Transport
2. Courier
3. Calibration
4. Training/ISO

19. [19]
The Laxmi Diamond has adequate communication facilities like,
1. Telephone
2. Fax
3. E - mail
4. Computers
5. Intercom phones
Approved Suppliers for raw materials and other services are available.
There are no out-sourced products / services in Laxmi Diamond.

20. [20]
ABOUT THE TOPIC
AND
LITERATURE REVIEW

21. [21]
About the topic
OVERVIEW OF FINANCIAL MANAGEMENT
Finance is regarded as the lifeblood of any business organization. The Financial
management study of about the process of procuring of financial resources and its
judicious utilization with a view to maximizing the shareholders wealth. Efficient
management of every business enterprise is largely dependent on the efficient
management of its finance.
“Financial Management is concerned with the efficient use of an important
economic resource, namely capital funds”. From the starting and registration to winding
up of a unit, finance play dominate role in each and every business unit.
In short financial management is managerial activity, which is concerned with
planning and controlling of the firm’s financial resources.
Modern approach of financial management requires four broad decision areas
of financial management viz.
 Investment Decision
 Financing Decision
 The dividend policy Decision
 Working Capital Management
This report covers analysis of the last decision i.e., Working Capital
Management. It is very important for short-term survival, which is must for long-term
success. It is concerned with the management of current assets.

22. [22]
WORKING CAPITAL MANAGEMENT
Management of working capital is an extremely important area of financial
management as current assets represent more than half of the total assets of a
business. Fixed assets through essential for a business organization, does not by itself
produce revenue or income. Fixed assets act with current assets to generate revenue or
income. Therefore, working capital is necessary for utilizing the productive capacity of
fixed capital. For shortage of working capital, the enterprise would suffer reduction in
earnings due to productive capacity remain unutilized. While, excess working capital
leads to extra cost for want of productive capacity. Thus, the amount of working capital
in every enterprise, whether manufacturing or non-manufacturing, should be neither
more or less than what is actually required.
Working capital in business is just live blood in human body. Optimum and
appropriate movement of blood through the body is extremely necessary to continue
life. Like human blood, the proper circulation of funds (working/circulating capital) is
utmost necessary to continue business. If the circulation of working capital becomes
weak, the businesses can hardly prosper and service. An enterprise should maintain
optimum amount of working capital so as to carry on the productive and distributive
activities smoothly. While, the determination of optimum level of working capital involves
fundamental decisions to an organization’s liquidity, which in turn are influenced by a
trade off between profitability and liquidity.
Thus, goal of working capital management is to manage the firm’s current assets
and liabilities in such a way that satisfactory level of working capital maintained.

23. [23]
WORKING CAPITAL MEANING, DEFINITION
In accounting “Working capital is the difference between the inflow and out flow of
funds.” It other words it is the net cash inflow.
Working capital is defined as excess of current assets over current liabilities and
provision. In other word, it is “net current assets or net working capital.”
Working capital can be defined broadly in two different ways i.e. gross working capital
and Net working capital.
Gross working capital refers to organizations investment in total current assets. Current
assets are the assets, which can be, convert in to cash with in an accounting year and
include cash, marketable securities, inventory etc. it is also known as circulating capital.
Net working capital refers to the different between current assets and current liabilities
are those claims of outsiders, which are accepted to mature for payment within an
accounting year and include creditors, bills payable and outstanding expenses.
Symbolicall:
NWC = CA – CL.
Where, NWC = Net working Capital
CA = Current Assets
CL = Current Liabilities
Net working capital can also be defined as that portion of firm’s current assets, which is
financed by long-term funds.

24. [24]
NEED FOR WORKING CAPITAL
The need for working capital to run the day-to-day business activities cannot over
emphasize. We will hardly find a business firm, which doesn’t require any amount of
working capital. Indeed, firms differ in their requirement of working capital.
We known that firm should aimed at maximizing the wealth of its shareholders. In
its endeavor to do so, firm should earn sufficient return from its operation. Earning a
study amount of profit require successful sales activity. But there is always time gap
between the day of sales & its realization from debtors realization from debtors will take
time but firm has arrange money for purchase of raw material, to pay for salary, wages
and other expenses. Therefore sufficient working capital in needed. The operating cycle
can be said to be reason for the need for working capital.
IMPORTANCE OF WORKING CAPITALMANAGEMENT
Working capital is considered as central nervous system of a firm. The importance of
working capital management is reflected in the time most spent by financial managers in
managing current assets and current liabilities. Maintenance of adequate working
capital is necessary in order to discharge day to day liabilities and protect the business
from adverse effects in times of emergencies. It aims at protecting the purchasing
power of assets and maximizes the return on investment.
The goal of working capital management is to maximize the cost of working capital while
maximizing a firm’s profit. The working capital management is concerned with
determination of relevant levels of current assets and their efficient use as well as the
choice of financial mix. The efficiency of a firm to earn profits depends largely on its
ability to manage working capital. In other words, working capital management policies
have a crucial effect on firm’s liquidity an profitability. Hence, working capital has to be
effectively planned, systematically controlled and optimally utilized.

25. [25]
TYPES OF WORKING CAPITAL
The operating cycle creates the need for current assets (working capital).
However the need does not come to an end after the cycle is completed to explain this
continuing need of current assets a destination should be drawn between permanent
and temporary working capital.
There are mainly two types of working capital.
a) Permanent Working Capital
b) Temporary Working Capital
WORKING CAPITAL
PARMENENT WORKING
CAPITAL
TEMPORARY
WORKING CAPITAL
INITIAL W.C. SPECIAL W.C.SEASONAL
W.C.
REGULAR
W.C.

26. [26]
a) Permanent Working Capital: -
The need for current assets arises because of operating cycle. The operating
cycle is continuous process and therefore the need for current assets is felt constantly.
But the magnitude of current assets needed is not always the same. It increases and
decreases over time. However there is always a minimum level of current assets, which
are continuously required, by firm to carry or its business operations is called permanent
or fixed working capital. This minimum level of working capital is necessary on the
regular basis even if the management of working capital is done efficiently in the
organization.
As this type of working capital is minimum necessary for the business at all points of
time, it is financed by the long-term sources.
b) Temporary Working Capital: -
The amount over and above the permanent level of working capital is temporary,
fluctuating or variable working capital. The need for such type of working arises
because of fluctuations in production and sales. The additional requirement may be
during more active season when the volume of production and sales more goes up
necessitating extra blockage of funds temporarily in current assets like Bank Balance,
inventory, debtors, etc.
The temporary working capital is the additional funds required. Whose volume is
different at different points of time and hence it is financed by short-term sources.

27. [27]
Both concepts are depicted in the following figure: -
Time
However when the business is growing, the level of permanent working capital also
grows. The working capital graph will be rising one as given in figure below:
Time
A
M
O
U
N
T
O
F
W.
C.
Permanent Working
Capital
Temporary Working Capital
A
M
O
U
N
T
O
F
W.
C.
Permanent Working
Capital
Temporary Working
Capital

28. [28]
DETERMINANTS OF WORKING CAPITAL
There are no set formulates to determine the working capital requirements of firms. A
large no. of factors each having a different importance, influence working capital needs
of firms. However, the factors may vary from organization to organization. Therefore, an
analysis or relevant factors should be made in order to determine total investment in
working capital.
The following is the description of factors, which generally influence the working capital
requirement of firms.
1. Nature of Business: -
Business firm can be dividend in to three categories given below: -
I. Service organization or public utilities
II. Trading or financial organization
III. Manufacturing organization
Service organizations don’t normally hold any inventory or the level inventory
may be very low. Again major sale of such services are on cash basis. Hence they
require very less amount of working capital.Trading or financial organization have to
maintain sufficient amount of cash and inventory.Hence working capital requirement of
such organization are relatively very high.
Working capital requirement of manufacturing organization normally falls
between the above two extremes.
2. Volume of sales: -
The higher the sales on credit basis, the higher is the requirement of working capital, as
more and more amount is getting blocked in debtors.
3. Manufacturing Cycle: -
The manufacturing cycle refers to the time spent by a product right from the stage of
purchase of its raw material to the stage of completion of finished goods. Obviously the
larger the manufacturing cycle of a company the higher is the volume of working capital
needed to finance blockage of money in raw material, work in progress and finished
good

29. [29]
4. Business Cycle: -
No business can remain study for all the time. It passes through the stages of prosperity
and depression. During Prosperity, the volume of sales increases necessitating higher
level of inventories and debtors, i.e. more Amount of working capital is required to
sustain higher levels of activity during prosperity. Depression has exactly an opposite
effect on the level of working capital requirement.
5. Credit Policy: -
If the organization is following a liberal credit p[policy for its customers, it will result in
higher debtors leading to requirement of more working capital.
However, if the organization is availing liberal credit term from its suppliers, the need for
working capital is reduced.
6. Tax Structure: -
The entire profit generated may not be available to the organization because of a
simplest fact. The organization has to pay its taxes in time. Tax rates vary in different
forms of organization and accordingly working capital requirement of different
organization will be different.
7. Dividend Pay out ratio: -
If dividend payout ratio is high, the organization may have earned profit but-the profits
available only after payment of dividends is available for financing working capital.
Hence, higher working capital will be required if Dividend payout ratio is high.
8. Availability of Funds: -
If the credit worthiness of an organization is good, it may manage the business with less
Working Capital. The reason may be that the organization may procure the funds
whenever it needs the funds.
9. Change in Technology: -
Change in technology affects the requirement for working Capital. If the firm decides to
go for automation, this would reduce the requirements of Working Capital. If the firm
adopts a labor-intensive process, the requirement of working capital will be larger.
10. Size of the Firm: -
Bigger firms may require lesser working capital as compared to their total sales or
assets. Of course the absolute amount of working capital will be higher in bigger firms.

30. [30]
The level of Working Capital is determined by a wide variety of factors that are partly
internal to the firm and partly external to it. Efficient working capital management
requires efficient planning and a constant review of the needs for an appropriate
working capital strategy.
SOURCES OF WORKING CAPITAL
The main sources of working capital are as under:
1. Shares and debentures
2. Retained earnings
3. Commercial Banks
a. Loans
b. Bank Overdraft
c. Cash Credit
4. Commercial Paper
5. Certificate of Deposit
6. Commercial Bills Market
7. Factoring
8. Trade Creditors
9. Public deposit
10.Indigenous Bankers and Money Lenders

31. [31]
Literature Review
Many researchers have studied working capital from different views and in different
environments. The following ones were very interesting and useful for our
research:(Eljelly, 2004) elucidated that efficient liquidity management involves planning
and controlling current assets and current liabilities in such a manner that eliminates the
risk of inability to meet due short-term obligations and avoids excessive investment in
these assets. The relation between profitability and liquidity was examined, as
measured by current ratio and cash gap (cash conversion cycle) on a sample of joint
stock companies in Saudi Arabia using correlation and regression analysis. The study
found that the cash conversion cycle was of more importance as a measure of liquidity
than the current ratio that affects profitability. The size variable was found to have
significant effect on profitability at the industry level. The results were stable and had
important implications for liquidity management in various Saudi companies. First, it was
clear that there was a negative relationship between profitability and liquidity indicators
such as current ratio and cash gap in the Saudi sample examined. Second, the study
also revealed that there was great variation among industries with respect to the
significant measure of liquidity.
(Deloof, 2003) discussed that most firms had a large amount of cash invested in
working capital. It can therefore be expected that the way in which working capital is
managed will have a significant impact on profitability of those firms. Using correlation
and regression tests he found a significant negative relationship between gross
operating income and the number of days accounts receivable, inventories and
accounts payable of Belgian firms. On basis of these results he suggested that
managers could create value for their shareholders by reducing the number of days’
accounts receivable and inventories to a reasonable minimum. The negative
relationship between accounts payable and profitability is consistent with the view that
less profitable firms wait longer to pay their bills .

32. [32]
(Ghosh and Maji, 2003) in this paper made an attempt to examine the efficiency of
working capital management of the Indian cement companies during 1992 – 1993 to
2001 – 2002. For measuring the efficiency of working capital management,
performance, utilization, and overall efficiency indices were calculated instead of using
some common working capital management ratios. Setting industry norms as target-
efficiency levels of the individual firms, this paper also tested the speed of achieving that
target level of efficiency by an individual firm during the period of study. Findings of the
study indicated that the Indian Cement Industry as a whole did not perform remarkably
well during this period.
(Shin and Soenen, 1998) highlighted that efficient Working Capital Management (WCM)
was very important for creating value for the shareholders. The way working capital was
managed had a significant impact on both profitability and liquidity. The relationship
between the length of Net Trading Cycle, corporate profitability and risk adjusted stock
return was examined using correlation and regression analysis, by industry and capital
intensity. They found a strong negative relationship between lengths of the firm’s
nettrading Cycle and its profitability. In addition, shorter net trade cycles were
associated with higher risk adjusted stock returns. (Smith and Begemann 1997)
emphasized that those who promoted working capital theory shared that profitability and
liquidity comprised the salient goals of working capital management. The problem arose
because the maximization of the firm's returns could seriously threaten its liquidity, and
the pursuit of liquidity had a tendency to dilute returns. This article evaluated the
association between traditional and alternative working capital measures and return on
investment (ROI), specifically in industrial firms listed on the Johannesburg Stock
Exchange (JSE). The problem under investigation was to establish whether the more
recently developed alternative working capital concepts showed improved association
with return on investment to that of traditional working capital ratios or not. Results
indicated that there were no significant differences amongst the years with respect to
the independent variables. The results of their stepwise regression corroborated that

33. [33]
total current liabilities divided by funds flow accounted for most of the variability in
Return on Investment (ROI). The statistical test results showed that a traditional working
capital leverage ratio, current liabilities divided by funds flow, displayed the greatest
associations with return on investment. Wellknown liquidity concepts such as the
current and quick ratios registered insignificant associations whilst only one of the
newer working capital concepts, the comprehensive liquidity index, indicated significant
associations with return on investment. All the above studies provide us a solid base
and give us idea regarding working capital management and its components. They also
give us the results and conclusions of those researches already conducted on the same
area for different countries and environment from different aspects. On basis of these
researches done in different countries, we have developed our own methodology for
research.
Mathuva (2009) examined the influence of working capital management components on
corporate profitability by using a sample of 30 firms listed on Nairobi Stock Exchange for
the periods 1993-2008. He used Pearson and Spearman‟s correlations, the pooled
ordinary least squares and the fixed effects regression models to conduct data analysis.
The key findings of his study were that there exists a highly significant negative
relationship between the time it takes for firms to collect cash from their customers and
profitability, there exists a highly significant positive relationship between the period
taken to convert inventories to sales and profitability and there exists a highly significant
positive relationship between the time it takes for firms to pay its creditors and
profitability.
The conclusive sum of this retrospective review of relevant literature produced till date
on the offered subject reveals wide room for the validity and originates of this work and
reflects some decisive evidences that affirm its viability, as may be marked here it. Nor
has any previous research examined the optimal level of working capital key
components through working capital cycle, composition of working capital and the
existence of liquidity and profitability relationship, efficiency and liquidity trends of
private sector steel companies. No study has incorporated in this fashion before the
present one.

34. [34]
RESEARCH METHODOLOGY
&
PROPOSAL

35. [35]
Research Methodology
Problem statement
“Analyzing Working Capital Management at Laxmi Diamond Ltd”
Objectives of study:
1. The present earning capacity or profitability of the Laxmi diamond
2. The Short-term liquidity & long-term solvency
3. The financial stability of a business.
4. To analyze different ratios so to judge the availability and effective usage of
working capital
Benefits of the study:
1. It helps the business concern in maintaining the goodwill.
2. It can arrange loans from banks and others on easy and favorable terms.
3. It enables a concern to face business crisis in emergencies such as depression.
4. It creates an environment of security, confidence, and over all efficiency in a
business.
5. It helps in maintaining solvency of the business.
RESEARCH DESIGN
DESCRIPTIVE STUDY:
The Project consists of Research Design based on descriptive study.
As it will help us describe relevant aspects of phenomena of cash conversion cycle and
provide detailed information about each relevant variable.

36. [36]
The information covered is about:
 General information about working capital management.
 Information about various ratios. .
DATA COLLECTION TOOLS
Secondary Data:
Secondary data are the data which are already collected and use for some other
purpose. I use secondary data for analyzing working capital management at Laxmi
Diamond.
Sources of Secondary Data:
 Annual Reports
 Cost & Budget Reports
 Cash Report
 Raw Materials Report
 Production Reports
 Creditors Reports
 Debtors Reports
 Inventory Reports
 Sales Reports

37. [37]
DATA ANALYSIS
AND
INTERPRETATION

38. [38]
Working capital ratios:
Working capital ratios indicate the ability of a business concern in meeting its current
obligations as well as its efficiency in managing the current assets for generation of
sales. These ratios are applied to evaluate the efficiency with which the firm manages
and utilizes its current assets. The following three categories of ratios are used for
efficient management of working capital:
(1) Efficiency ratios
(a) Working capital to sales ratio = sales/working capital
(b) Inventory turnover ratio = sales/inventory
(c) Current assets turnover ratio = sales/current assets
(2) Liquidity ratios
(a) Current ratio = current assets, loans & advances/current liabilities & provisions
(b) Quick ratio = current assets, loans & advances – inventories/current liabilities &
Provisions.
(2) Structural health ratios
(a) Current assets to net assets = total net assets/current assets
(b) Debtors collection period (in days) = debtors/sales × 365
(c) Creditors payment period (in days) = creditors/purchases × 365

39. [39]
(1). Efficiency ratios
(a) Working capital to sales ratio = sales/working capital
This ratio is computed by dividing sales by working capital. This ratio helps to measure
the efficiency of net working capital. It signifies that for an amount of sales, a relative
amount of working capital is needed. If any increase in sales is contemplated, working
capital should be adequate and thus, this ratio helps management to maintain the
adequate level of working capital.
Year Sales Working Capital Sales/working capital
2010-11 605561476 137980774.33 4.3
2009-10 420063443 126981552.58 3.30
2008-09 479631484 134709368.83 3.56
2007-08 499084059 139013642.73 3.59
2006-07 441764760 101268885.3 4.36

40. [40]
Interpretation:
From the above table we can say that the sale to working capital is quite up in
the recent year. The ratio is more or less increase during the last five years that
is the good sign for the company. These indicate the company has sufficient net
working capital.
2010-11 2009-10 2008-09 2007-08 2006-07
Sales/working capital 4.3 3.3 3.56 3.59 4.36
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Sales/working capital

41. [41]
b) Inventory turnover ratio = sales/inventory
This ratio indicates the effectiveness and efficiency of the inventory management. The
ratio shows how speedily the inventory is turned into accounts receivable through sales.
The higher the ratio, the more efficiently the inventory is said to be managed vice versa.
2010-11 2009-10 2008-09 2007-08 2006-07
sales/inventory 5.01 3.63 6.76 3.42 3.22
0
1
2
3
4
5
6
7
8
sales/inventory
Year Sales Inventory sales/inventory
2010-11 605561476.00 120730409.00 5.01
2009-10 420063443.00 115630324.00 3.63
2008-09 479631484.00 70904100.00 6.76
2007-08 499084059.00 145837950.00 3.42
2006-07 441764760.00 137029394.00 3.22

42. [42]
Interpretation:
The inventory Turnover ratio in 2011 is high as compared to the year 2009
which can be considered as good sign for the company as its turnover is
increasing.
2) Liquidity ratio
(a) Current ratio = current assets, loans & advances/current liabilities &
provisions
This ratio indicates the extent of the soundness of the current financial position of an
undertaking and the degree of safety provided to the creditors. The higher current ratio,
the larger amount of rupee available per rupee of current liability, the more the firm’s
ability to meet current obligations and the greater safety of funds of short term creditors.
Current assets are those assets which can be converted into cash within a year. Current
liabilities and provisions are those liabilities that are payable within a year.
Year Current assets,
loans &advances
Currentliabilities& provision current assets,
loans &
advances/current
liabilities &
provisions
2010-11 3226697812.33 188717038 1.73
2009-10 313171790.58 186190238 1.68
2008-09 243516228.83 108806860 2.23
2007-08 2367511478 175236298 2.15
2006-07 246622487.83 145353602 1.7

43. [43]
Interpretation:- The ideal ratio is 2:1. In this ratio we measure about
company current assets obligation against current liabilities. This is good
position in the firm, in 2009-10 the ratio is 1.68 and in 2010-11 it is 1.73 by
which we can conclude that the company is not in a ideal position.
2010-11 2009-10 2008-09 2007-08 2006-07
current assets, loans &
advances/current
liabilities & provisions
1.73 1.68 2.23 2.15 1.7
0
0.5
1
1.5
2
2.5
current assets, loans &
advances/current liabilities &
provisions

44. [44]
(b) Quick ratio = current assets, loans & advances – inventories/current liabilities
& provisions
Quick ratio is a more refined tool to measure the liquidity of an organization. It is a better
test of financial strength than the current ratio, because it excludes very slow moving
inventories and the items of current assets which cannot be converted into cash easily.
This ratio shows the extent of cushion of protection provided from the quick assets to
the current creditors. A quick ratio of 1:1 is usually considered satisfactory through it
2010-11 2009-10 2008-09 2007-08 2006-07
Quick ratio 16.46 1.06 1.59 12.68 0.75
0
2
4
6
8
10
12
14
16
18
Quick ratio
Year Current assets,
loans &advances
Inventory Current assets,
loans &
advances –
inventory
Current
liabilities&
provision
Quick
ratio
2010-11 3226697812.33 120730409.00 3105967403.33 188717038 16.46
2009-10 313171790.58 115630324.00 197541466.58 186190238 1.06
2008-09 243516228.83 70904100.00 172612128.83 108806860 1.59
2007-08 2367511478 145837950.00 2221673528 175236298 12.68
2006-07 246622487.83 137029394.00 109593093.83 145353602 0.75

45. [45]
Interpretation:-
Quick ratio indicates the liquidity position of the firm. Higher the ratio
company position is good , Here Laxmi Diamond quick ratio is comparatively
higher in the year 2010-11 so it indicates is good liquidity position.
3) Structural health ratios
(a) Current assets to net assets = total net assets/current assets
This ratio explains the relationship between current assets and total investment
in assets. A business enterprise should use its current assets effectively and
economically because it is out of the management of these assets that profits
accrue.
Year Total net assets Current assets total net assets/current
assets
2010-11 359880716.32 326697812.33 1.10
2009-10 346877422.20 313171791.11 1.11
2008-09 280256479.17 235453975.2 1.19
2007-08 277939949.91 259632280.73 1.07
2006-07 264734325.64 246622487.3 1.07

46. [46]
Interpretation:-
Here In this ratio there are no fluctuations in the last 5years the company
maintain the current assets and net current assets position.
(b) Debtors collection period (in days) = debtors/sales × 365
The debtor’s turnover suggests the number of times the amount of credit sale is
collected during the year, while debtors ratio indicates the number of days during which
the dues for credit sales are collected. Suppose the debtors’ ratio is 60 days, it means
that debtors pay their dues for credit sales after 60 days of making the sales.
0
20
40
60
80
100
120
2010-
11
2009-
10
2008-
09
2007-
08
2006-
07
Debtors/sales × 365
Debtors/sales ×
365

47. [47]
Interpretation:-
Here, we can see that every year there is fluctuation in debtors ratio which
mean’s that supply of money is from debtor to company takes lesser time and
that is good for the company.
Year Debtors Sales debtors/sales Debtors/sales
× 365
2010-11 164429798 605561476 0.27 99
2009-10 183776823 420063443 0.44 160
2008-09 152322216.03 479631484 0.32 116
2007-08 104258967 499084059 0.21 76
2006-07 97919943 441764760 0.22 80
0
20
40
60
80
100
120
140
160
1 2 3 4 5 6
Debtors/sales × 365

48. [48]
(b) Creditors payment period (in days) = creditors/purchases × 365
The measurement of the creditor payment period shows the average time taken to pay
for goods and services purchased by the company. In general the longer the credit
period achieved the better, because delays in payment mean that the operation of the
company are being financed interest free by suppliers funds.
Year Creditors Purchases Creditors/
Purchases
Creditors/
Purchases
× 365
2010-11 180325372 395679746 0.46 166
2009-10 185173718 266465321 0.69 254
2008-09 107979626 394470457 0.27 100
2007-08 111053898 396980675 0.28 102
2006-07 143070126 320355497 0.45 163

49. [49]
(a) Gross profit turnover ratio = Gross profit / turnover
Year Gross profit turnover Gross profit /
turnover *100
2010-11 26857685 605561476 4.44
2009-10 20172749 460005027 4.39
2008-09 19418507.89 479631484 4.05
2007-08 21200424.52 499084059 4.25
2006-07 17489921.42 441764760 3.96

50. [50]
(B) Net profit turnover ratio = Net profit / turnover
Year Net profit turnover Net profit /
turnover *100
2010-11 9371229.41 605561476 1.55
2009-10 3613487.54 460005027 0.79
2008-09 - - loss
2007-08 8187746.27 499084059 1.64
2006-07 7411472.03 441764760 1.68

51. [51]
(c) Stock-in-trade turnover ratio = Stock-in-trade / turnover
Year Stock-in-trade turnover Stock-in-trade /
turnover *100
2010-11 120730409 605561476 19.94
2009-10 115630324 460005027 25.14
2008-09 70904100 479631484 14.78
2007-08 145837950 499084059 29.22
2006-07 137029394 441764760 31.02

52. [52]
FINDING
&
CONCLUSIONS

53. [53]
RECOMMENDATIONS

54. [54]
BIBLIOGRAPHY